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1920b 
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Calendar No. 387. 



TH Congress, 
2d Session. 



\ 



SENATE. 



Report 
No. 430. 



SHIPS ACQUIRED FROM GERMANY. 



February 21, 1920. — Ordered to be printed. 



Mr. Jones of Washington, from the^ Committee on Commerce, sub- 
mitted the following 

REPORT. 

[To accompany S. 3928.] 

The Committee on Commerce, to whom was referred the bill (S. 
3928) relating to the ships acquired from Germany and for other 
purposes, having considered the same, report favorably thereon with 
the recommendation that the bill do pass with amendments. 

At the end of line 5 strike out the semicolon and insert the follow- 
ing: "establishing a definite shipping policy;' 

In line 8, after the word ''delay" insert the following: "in such 
manner as will in its judgment make them most serviceable for 
profitable operation or sale." 

In line 9, immediately preceding the word ''operation," insert the 
words "sale and," and strike out at the end of the line the words 
"now under its control." 

At the end of line 10 strike out the period and insert the following: 
"or other available funds." 

Prior to our entry in the war 105 German ships were interned in 
our ports. Of these about 30 were passenger or combination pas- 
senger and freight ships. When we entered the war all of these 
ships were taken over oy a resolution of Congress and now belong 
to the United States. The passenger and combination passenger 
and freight ships, about 30 in number, alone are affected by this bill. 
They were changed into troop ships after the damage done to them 
by tiie Germans had been repaired and were used by the War Depart- 
ment. Repairing the damage to these ships cost many millions of 
dollars. Tney are now being turned over to the Shipping Board 
after their need for the Army passes. Before thay can be put into 
commercial use they must be changed from troop ships and recon- 
verted into passenger ships. This will cost a great deal of money, 
estimated by the Shipping Board at $75,000,000 or more. 

The Shipping Board very properly has been considering what 
should be done to get these ships in use, taking into consideration 



JJ5 70 

2 SHIPS ACQUIRED FROM GERMANY. 

their condition, what it probably would cost to put them in shape, 
the liability of the Government and probable cost to the Govern- 
ment if it continued to own and operate the ships as compared with 
private ownership and operation. The Shipping Board reached the 
conclusion that it would be more economical and wiser to sell the 
ships, the purchaser to take them as they are, repair and recondition 
them and operate them under the American flag on certain routes 
specified by the board. Proposals for purchase under these condi- 
tions were called for several weeks ago and sealed bids received. 
One bid of about $28,000,000 was received from one company for 
the 30 ships. The Shipping Board decided by resolution not to 
accept any one bid for all the ships, and so this bid was given no 
further consideration. Individual bids were submitted on 20 of the 
ships bv about 12 different firms or companies and these bids aggre- 
gated about !528,000,000. 

0')jecti()ns were made to the sale of these ships upon various 
grounds and further proposals were invited by the board, with the 
result that lower oft'ers than those received through sealed bids 
were made. The Shipj)ing Board advised the Committee on Com- 
mierce that it expected to reject aU the bids and take further steps 
to see if better and reasonably satisfactory offers could be secured, 
and, if so, that it expected to dispose of the ships under the law as it 
now is unless Congress should direct otherwise. In the meantime, 
however, injunction proceedings were begun in the courts to restrict 
the Shipping Board from selhng the ships on the ground that it had 
no authority to do so. The committee is advised that a temporary 
injunction has lieen issued and an appeal taken. This is likely to 
prevent any action by the Shipping Board for a considerable time. 
This in brief is the situation confronting Congress as weU as the 
Sliipping Board. 

These ships arc urgently needed in our foi-eign business. Regular 
routes between this country, South America, Europe, and the Orient 
should be estabhshed as prom])tly as possil)le. These ships, when 
repaired and reconditioned, are liighly suitable for this purpose. The}' 
were considered the best of their kind in the world before the war. 
They were taken from an enemy. We have spent millions of dollars 
on them, and they have carried hundreds of thousands of our boys 
to and from tlie battle fields of Europe and were a great factor in 
saving modern civilization from military autocrac}'. Tliis fact 
probably has much to do with creating an almost universal sentiment 
among our people against their sale. 

The financial phase of tJie situation is about this: The aggregate 
tonnage of these ships is about 374,612 gross tons, while that of the 
20 for which bids were submitted January 20 is about 280,796 gross 
tons. Some of the 30 ships are over 20 years old; some are about 6 
years old. Their average is about 16 years. Sealed bids for 21 
boats, including the Leviathan, aggregated $28,231,940. A naval 
board valued 19 of these boats, including the Leviathan, immediately 
after they were taken over under tlie resolution of Congress, at 
$20,180,350. Twenty of these boats, including the Leviathan, were 
appraised 1)V expe.-ts" selected by the Shipj)ing Board at $27,585,000. 
The Ship])ing Board estimates that repairing and reconditioning the 
20 ships for wliicii about $28,000, 000 was bid will cost under tlie best 
possible estimate, $57,000,000, and at this rate the refitting of the 30 

o; •t ^. 

iMH \^ 1920. 



SHIPS ACQUIRED FROM GERMANY. 3 

ships would cost about $85,000,000; so that on this basis the 20 ships 
would cost a purchaser about $85,000,000 and the 30 ships 
$103,000,000. If the Government does not sell the ships, it should 
proceed at once to put them in condition for use. Everybody con- 
cedes this. The longer the ships are tied up the more rapidly they 
will deteriorate and the greater will be the cost of refitting. In any 
event it wiU take from 6 to 12 months to repair them. No one can 
teU whether the Government will be able to sell the ships, when 
repaired for the amount of the bids submitted plus the cost of repairs. 
Some think this can be done. Others believe they can be sold at a 
greater price. The bids submitted may be lower than they would 
be if the Government had adopted a permanent shipping policy. 
This we hope will be done within a couple of months, and if a wise 
policy is adopted it will very greatly aid in the disposition of these 
ships. Bids were probably lower than they would have been if 
their servico had not been confined to specific routes, but these ships 
should be used upon the routes deemed most desirable. Higher bids 
would doubtless have been received if the sale of the ships had been 
open to foreigners, but neither the Congress not the people will permit 
these ships to go to a foreign flag. 

If sold to private parties, we can not be sure that they will continue 
under the American flag nor that they will be kept upon the routes 
desired. Private parties will not continue the service at a loss. If 
the Government continues to own these ships, the service desired 
can and will be maintained. This assurance will develop business 
and business agencies and doubtless soon put the service upon a 
paying basis and the ships can then very likely be disposed of for all 
they cost, if not more, under such restrictions and upon such terms as 
will not only insure the maintenance of the service but their con- 
tinuance under our flag. 

Considering all these things, as well as many others, the Committee 
on Commerce came to the conclusion that it is wiser and better that 
these ships be not sold now and that the Government proceed without 
delay to repair them and put them in shape for service. Such action 
is not the determination of a permanent policy. That will be de- 
termined in a general bill which the committee hopes to report before 
long. If Congress should determine in favor of Government owner- 
ship and operation, these ships will be embraced within such a policy. 
If Congress shall provide for private ownership and operation, these 
ships will be disposed of as may be provided under such a policy. 
The bill recommended by the committee simply determines for the 
time being the status of these ships until such legislation can be 
passed and provide for their prompt repair. We believe this action 
to be wise from a business standpoint, sound from the standpoint of 
the national interests, and in harmony with the sentiment of the 
people of the country. 

o 



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